I know what you’re thinking. What on earth is she talking about? Why would I buy a home and not live in it? Well, if you want to retire some day, granted, you will want to eventually live in a home that is paid off. That’s a given. Sure, mortgage rates for investing in real estate are higher than if the purchase is for your primary home, but statistically speaking, even those rates are still relatively low.
So, what happens if you’ve been saving money for a few years and have been renting and waiting for the “right” time to purchase your next home? What if the housing market where you want to live is no longer affordable when you finally feel you have a large enough down payment?
Where it is true that most of San Diego’s home values have recouped their equity losses from the Bernanke years, there are still some areas in other parts of California and the rest of the country, maybe even in remote parts of our county, that have not yet reached their previously higher prices. Does that mean that there is still equity to be made? Sure, but they are not always going to be in areas you want to live. Please keep reading; I’m trying to think outside of the box.
So, temporarily speaking, it might be shrewd to invest in a property that could have some upward mobility potential in the next 5-10 years, even if that means YOU WOULD NOT LIVE IN IT. I’m not saying that buying real estate is risk free, but not many investments come with no risks. All I’m saying is, if you can keep your rent low enough, where you can still afford to buy just one piece of valuable real estate as an investment, then why would you not want to take advantage of the tax write-offs that come with investing in real estate? No one said you had to live in it. In the long run, you may be able to cash in on some equity to buy the house you do WANT to live in.
I’m just saying, we all have to have an exit plan for retirement and if you don’t use real estate to your advantage, then you had better win the lottery or invent some alternative energy we will all want or need to use some day. Don’t think prices can go any higher? Let me ask you this, did you ever think we’d be where we are today, as fast as real estate values have risen in the last 3 years?
